Dubai is counted as one of the top destinations for establishing businesses. Tax policies, infrastructure, transparency in processes and state-of-the-art commercial buildings are some of the aspects that make it a favourable option. Businesses willing to lease a commercial space in Dubai are required to follow a certain process and fulfil the eligibility criteria set by the government.
Today, we will cover all the processes, criteria and other necessary details regarding commercial property leasing in Dubai. Before proceeding, let’s first clear the confusion between leasing and renting commercial properties.
Renting Vs Leasing Commercial Property in Dubai
Lease and rent are often confused with each other and the terms are used interchangeably. However, leasing and renting are two different processes of acquiring a property.
In a rental property, rights to use the property are given to the tenant in exchange for rent, but it is for a limited time period. The time period can be from an hour to years, as per the agreement between both parties.
Whereas the lease of a property is for typically a longer time period with a maximum of 99 years, which can be reduced under certain circumstances. Moreover, on the expiration of the current contract, a new contract is required to be signed between the parties.
Now that you are aware of the difference between rent and lease, let’s dive a little deeper into commercial property for leasing in Dubai.
Types of Commercial Lease
Here are four different types of lease agreements in Dubai.
Gross Lease
Tenants pay the agreed amount of rent, whereas the landlord is responsible for other expenses like taxes, property maintenance and insurance in gross lease. A gross lease is the most basic type of lease agreement.
Land Lease
As evident from the name, land leases allow tenants to construct a building on a piece of land. The tenant will be responsible for all the other expenses involved in constructing and using the building for commercial purposes. After the maturation of the contract, the landlord will acquire the land and the building.
Triple Net Lease
A Triple Net lease is favourable for the landowners. In this type of lease, tenants are liable to pay rent and maintain the building. The expenses also include paying property taxes and the hidden cost of buying a house in Dubai.
Modified Net Lease
In the Modified Net lease, all the expenses are shared between tenants and landowners equally.
How to Lease Commercial Property in Dubai
Mentioned below are all the processes involved in leasing a commercial property in Dubai.
Fulfil Eligibility Criteria
Businesses willing to lease commercial property in Dubai are required to obtain a trade licence from Dubai Economic Department. It allows businesses to operate legally in the Emirate and also narrows down the areas where they can lease property. In case, your commercial property is located in a freezone, the licence will be issued by freezone authorities. For further information, read our blog on how to start a company in Dubai freezone area.
Apart from the licence, determining whether the business will be offshore or onshore is also necessary. If a business is onshore, companies are obligated to share their ownership with an Emirati. However, this condition is exempted if the business is operating from any of the free zones in Dubai.
Choose the Type of Office
The number of employment visas that can be sponsored by the business depends on the type of commercial space they have leased. Therefore, before browsing through commercial properties for rent in Dubai, list the number of employees you plan to sponsor.
Following are the number of visas allowed as per the office size:
- Companies operating from shared offices, also known as Flexi-desk, can sponsor up to 3 employment visas.
- Companies with service offices can sponsor up to 5 visas.
- For fully leased physical offices, the number of visas is dependent upon office size. 1 visa can be applied for 9 Sqm of the office.
Align Required Documents
The required documents for leasing commercial properties in Dubai are as follows.
- Business ownership proof
- Premises status that must comply with existing plans
- Emirates ID or Passport (Copy)
- Trade licence (Copy)
- NOC (for expats)
- Credit score
- Personal and business bank statements
These are the general set of documents required for leasing commercial property. The landowner and authorities may or may not ask for other documents. For convenience, hiring a real estate agent in Dubai is recommended.
Search Commercial Property
Once you are done with all the necessary steps, it’s time to search for the appropriate commercial property for your office. First, decide between the areas i.e. freehold areas or mainland areas. The next step is to find an appropriate commercial property, for which you can either choose online portals or contact a real estate agent. If you opt for a digital search, dubizzle is one of the largest real estate portals with multiple property listings. Here you can find numerous commercial properties for sale and rent in Dubai.
Registration with Ejari
Once you are done searching the property, it’s time to draft and sign the lease contract. Ejari Dubai is a government organisation that oversees all real estate transactions. Therefore, while signing the commercial property lease agreement in Dubai, make sure it includes all the clauses as per Ejari. Also, immediately register your contract with Ejari after signing.
Pay Fees and Charges
Lease is not counted among real estate transactions free from VAT. Therefore, tenants are required to pay the VAT on the lease. Along with this, tenants will pay for property maintenance, repairs, utilities and the furnishing office. These expenses may vary as per the type of lease and mutual agreement between the landlord and tenants.
Rent Payment of Leased Commercial Properties
Similar to home rental payments, the most commonly used method of paying rent for commercial properties is through cheques. The cheque can be issued from the tenant’s personal account or the company’s account. However, post-dated cheques are required to be submitted by the tenant as per the law. As agreed between the parties, 5% of the total annual rent needed to be paid as a security deposit which is refundable.
These were all about commercial property leasing in Dubai. The real estate market of Dubai is one of the largest and offers a myriad of properties for lease. If you are unaware of the region, read our Dubai annual rent property market report 2022 for further elaboration on the real estate trends in the Emirate.
Stay tuned to dubizzle’s property blog for more information on commercial property for lease in Dubai.
